Correlation Between Vanguard Extended and SPDR Russell
Can any of the company-specific risk be diversified away by investing in both Vanguard Extended and SPDR Russell at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Vanguard Extended and SPDR Russell into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Extended Market and SPDR Russell 1000, you can compare the effects of market volatilities on Vanguard Extended and SPDR Russell and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Vanguard Extended with a short position of SPDR Russell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Extended and SPDR Russell.
Diversification Opportunities for Vanguard Extended and SPDR Russell
0.98 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vanguard and SPDR is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Extended Market and SPDR Russell 1000 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SPDR Russell 1000 and Vanguard Extended is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Vanguard Extended Market are associated (or correlated) with SPDR Russell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SPDR Russell 1000 has no effect on the direction of Vanguard Extended i.e., Vanguard Extended and SPDR Russell go up and down completely randomly.
Pair Corralation between Vanguard Extended and SPDR Russell
Considering the 90-day investment horizon Vanguard Extended Market is expected to generate 1.35 times more return on investment than SPDR Russell. However, Vanguard Extended is 1.35 times more volatile than SPDR Russell 1000. It trades about 0.11 of its potential returns per unit of risk. SPDR Russell 1000 is currently generating about 0.13 per unit of risk. If you would invest 15,205 in Vanguard Extended Market on August 29, 2024 and sell it today you would earn a total of 5,267 from holding Vanguard Extended Market or generate 34.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Extended Market vs. SPDR Russell 1000
Performance |
| Timeline |
| Vanguard Extended Market |
| SPDR Russell 1000 |
Vanguard Extended and SPDR Russell Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Extended and SPDR Russell
The main advantage of trading using opposite Vanguard Extended and SPDR Russell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Extended position performs unexpectedly, SPDR Russell can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in SPDR Russell will offset losses from the drop in SPDR Russell's long position.| Vanguard Extended vs. Vanguard Large Cap Index | Vanguard Extended vs. Vanguard Small Cap Growth | Vanguard Extended vs. Vanguard Mid Cap Index | Vanguard Extended vs. Vanguard Mid Cap Growth |
| SPDR Russell vs. SPDR Russell 1000 | SPDR Russell vs. SPDR MSCI USA | SPDR Russell vs. SPDR MSCI EAFE | SPDR Russell vs. SPDR SSGA Small |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |